Many recent prior art incentive award programs utilize either a credit card or debit card which is issued to the Participant. For example, one such prior art process requires the issuance of a traditional credit card to each incentive program Participant. The Participant's cardholder account is assigned a credit limit which is based upon the Participant's past credit history. Earnings which are accumulated in the incentive award program are then used to "float" this credit limit up to the level of the Participant's assigned credit limit plus any available non-redeemed earnings. The Participant may then use the credit card to make purchases at any merchant honoring the credit card. These purchases will then downgrade the amount of available credit on the cardholder account. After settlement and posting of these purchase transactions into the cardholder's account, the incentive program's administrator may make a payment to the cardholder's account based upon charge amounts and any available program earnings. The Participant/cardholder is then responsible for any outstanding balances above the amount paid by the incentive program administrator. He may choose to pay this amount or allow the balance to revolve, thereby accruing interest charges until paid.
In such prior art systems, incentive award program points may be earned in any way, but it is most common to award points for use of the credit card, either to purchase the Sponsor's products or to purchase any items that may be paid for with the credit card. The incentive award program points therefore are in the nature of a rebate on the prior qualifying purchases.
In the system as just described, points earned by the Participant in the incentive program are converted to dollars whenever purchases are posted to the cardholder's account. At that time, any available points are converted to dollars and the incentive program administrator makes a payment to the credit card issuer (i.e. the Bank that issues the credit card). Under such a scenario, the incentive program administrator retains the money earned through the incentive program until such time as the program Participant makes a purchase with his credit card. This system therefore has the feature that the incentive program administrator keeps track of points earned through the incentive program and then converts these points to dollars immediately after the Participant makes a purchase with the credit card. The Sponsor of such a plan therefore provides an incentive to the Participant to perform the desired action in order to earn the award points, but once the award points are earned, they provide no further incentive to the Participant to perform the desired action. In other words, once the points are awarded, incentive to perform the desired action is only achieved by awarding further points; the previously awarded points don't create any incentive for customer loyalty.
There is therefore a need for a system and method for administration of an incentive award program in which incentive to perform the desired action is achieved not only by a Participant's desire for more award points, but is also achieved by the method by which the points may be redeemed. In particular, there is a need for a system and method for administration of an incentive award program which provides incentive both for performing the desired action and for Participant loyalty to the program. The present invention is directed toward meeting these needs